Measure II would establish a local gross receipts tax of up to 6% and up to a $15.00 per square foot cultivation/manufacturing tax on all Coachella businesses that transact in marijuana and marijuana-containing products (oils, creams, candies and “edibles”). The tax would cover marijuana cultivation and marijuana-product manufacturing, processing, testing, distribution and retail sale.
Earlier this year, the Coachella City Council adopted comprehensive medical marijuana business regulations. The regulations outright ban retail medical marijuana dispensaries as well as direct-tocustomer delivery. However, they allow medical marijuana cultivation, manufacturing, distribution, testing and transportation. In other words, the City allows the “wholesale” side of these operations, but bans the “retail” side. Permitted “wholesale” facilities are limited to specific areas of the City and subject to extensive local regulations.
While the City Council has the authority to adopt marijuana business regulations, marijuana business taxes must be approved by the voters under State law (California Proposition 218). It is specifically noted that Measure II is a tax measure only. It does not amend the City’s marijuana business regulations — it does not change or expand the number or types of marijuana businesses currently allowed in the City.
However, a Statewide initiative measure is also on this ballot that would legalize possession and use of recreational marijuana (Proposition 64). While Proposition 64 would allow Coachella to continue banning retail marijuana stores, it will require Coachella to reasonably allow indoor cultivation of medical and recreational marijuana.
Therefore, while the City currently has strict limits on marijuana uses (“wholesale” medical marijuana businesses only), this tax is drafted broadly to cover both medical and recreational marijuana, as well as both wholesale and retail marijuana businesses, should State or local law change and allow these uses in Coachella in the future.
Measure II was placed on the ballot by the City Council and, if approved, would establish the following tax rates on marijuana businesses:
- a maximum 6% gross receipts tax on all marijuana businesses (wholesale or retail, medical or recreational marijuana); and
- an additional tax up to a maximum of $15.00 per square foot of space utilized for cultivation/manufacturing of marijuana or marijuana-containing products. This includes “grow rooms”, testing facilities and processing/distribution facilities.
This is a “general tax” and, therefore, must be approved by a majority of the voters. It is estimated that Measure II would generate $4,000,000 annually to the City’s general fund. The general fund pays for general City services such as police, fire, emergency response, street maintenance, parks and recreational programs. The tax rates set by Measure II could be increased or decreased by the City Council provided the maximum rates listed above are not exceeded.
A “yes” vote on Measure II will approve the marijuana business taxes identified above.
A “no” vote on Measure II will not approve the marijuana business
taxes identified above.
The above statement is an impartial analysis of Measure II. If you desire a copy of the Measure, please call the elections official’s office at (760) 398-3502 and a copy will be mailed at no cost to you.
By: CARLOS CAMPOS, CITY ATTORNEY
